Should You Refinance Your Mortgage
Should I refinance my mortgage is a question that we get all the time with the decisions related to real estate investment and they are always tricky and require a thorough understanding of the financial products and detailed planning. One of the smart options available to property investors is refinancing their mortgage to a lender with better rates and terms than the existing one.
If you’re someone looking for the answer to the question ‘should I refinance my mortgage’, it makes sense to refinance your mortgage in the below situations- but if you are ready to refinance your mortgage you can do so by CLICKING HERE
Low Interest Rates
A lower interest rate on the new loan is a major factor that attracts a lot of home loan investors to consider refinancing. The lower interest rate on the refinanced loan will reduce the interest paid monthly and over the course of loan repayment period. It is important to ensure that the new interest rate offered is NOT with “discount points”. Discount points represent money you pay upfront in order to lower your interest rate for the life of the loan. There are instances when discount points make sense but you should always calculate whether or not this makes sense for your situation.
Gain the benefit of lower monthly payments through a longer term
Refinance is a great option if you need additional monthly cash flow, gained by having less expense in the form of a monthly mortgage payment. By refinancing the mortgage/home loan to a term that is longer than the existing mortgage, the investor can reduce the monthly payments and financial burden.
Advantage of shorter loan term
As the interest rates drop with changed market conditions, home loan investors often get an opportunity to refinance an existing loan with a new lender that, without much change in the monthly payment, offer a significantly shorter term. If you are getting such an opportunity with a new lender, going with the refinance is a good decision.
An opportunity to get rid of mortgage insurance
In case the outstanding loan amount is less than 80 percent of the home’s appraised value, an investor might be able to refinance into a loan without private mortgage insurance. This is especially beneficial for someone who has a mortgage insured by the Federal Housing Administration (FHA loan).
Summing it up:
Refinancing the Home Loan only makes sense in the below situations-
- The benefit of a lower interest rate
- If you are getting the benefit of a reduced payment through a longer term
- New lender is offering the benefit of reduced loan tenure for better payment terms
- Refinancing to eliminate PMI – Private Mortgage Insurance
No comments found.